MARKET DEVELOPMENT
Palm Imports by India Seen Falling as Rupee Slumps to Record
Palm Imports by India Seen Falling as Rupee Slumps to Record
13/08/2013 (Bloomberg) - Palm oil imports by India, the world’s largest buyer, probably declined for the first time in three months as the local currency dropped to a record, prompting importers to scale back purchases.
Inbound shipments fell 8.2 percent to 550,000 metric tons in July from 599,128 tons a year earlier, according to the median of estimates from five processors and brokers compiled by Bloomberg. The Solvent Extractors’ Association of India will release the data this week. Total vegetable oil imports, including for industrial use, dropped 2.3 percent to 850,000 tons from 870,328 tons, the survey showed.
A decline in purchases may boost stockpiles in Malaysia, the largest producer after Indonesia, just as the country starts its high-output cycle, pressuring futures in Kuala Lumpur. The rupee slumped to an all-time low this month on concern that the current-account deficit will widen from a record in the year ended March. The gap is the biggest risk to the $1.9 trillion economy, according to the central bank.
“The volatility was hurting importers,” said Pradip Desai, managing director of broker Palmtrade Services Pvt. “They’ve been cautious and scaling back purchases. We need more imports but are getting less. If imports do not pick up in August, then availability may be tight in September.”
Consumption of oils usually rises during the festival season, which lasts from this month through November. India, the biggest user after China, meets more than half its demand from imports. The country buys palm from Indonesia and Malaysia and soybean oil from the U.S., Brazil and Argentina.
Indian Stockpiles
Vegetable oil purchases in the eight months through June rose 12 percent to 7.15 million tons, association data show. Cooking oil demand may jump to 23 million tons by 2020 from 17.5 million tons and imports will grow significantly, says the Food Ministry. The rupee fell to 61.8050 per dollar on Aug. 6.
Palm for delivery in October climbed 2 percent to 2,250 ringgit ($692) a ton on the Malaysia Derivatives Exchange yesterday. Prices slumped 22 percent in the past year.
Output in Malaysia probably expanded more slowly than a year earlier in July, keeping inventories at the lowest in more than two years, a Bloomberg survey showed on Aug. 6. Production rose 10 percent to 1.56 million tons in July from a month earlier, while reserves held at 1.65 million tons, it showed.
Inventories in India, including those at ports and in the pipeline, were probably 2 million tons at the start of August from 2.06 million tons in July, said Sandeep Bajoria, chief executive officer of Mumbai-based broker Sunvin Group.
“With the festival season starting soon these stocks should come down,” he said. “Consumers have been mostly protected from the impact of the depreciating rupee as overseas prices are weak.”
Crude soybean oil imports probably jumped to 230,000 tons in July from 156,720 tons a year earlier, while sunflower oil purchases may have declined to 60,000 tons from 80,101 tons, the survey showed.
Inbound shipments fell 8.2 percent to 550,000 metric tons in July from 599,128 tons a year earlier, according to the median of estimates from five processors and brokers compiled by Bloomberg. The Solvent Extractors’ Association of India will release the data this week. Total vegetable oil imports, including for industrial use, dropped 2.3 percent to 850,000 tons from 870,328 tons, the survey showed.
A decline in purchases may boost stockpiles in Malaysia, the largest producer after Indonesia, just as the country starts its high-output cycle, pressuring futures in Kuala Lumpur. The rupee slumped to an all-time low this month on concern that the current-account deficit will widen from a record in the year ended March. The gap is the biggest risk to the $1.9 trillion economy, according to the central bank.
“The volatility was hurting importers,” said Pradip Desai, managing director of broker Palmtrade Services Pvt. “They’ve been cautious and scaling back purchases. We need more imports but are getting less. If imports do not pick up in August, then availability may be tight in September.”
Consumption of oils usually rises during the festival season, which lasts from this month through November. India, the biggest user after China, meets more than half its demand from imports. The country buys palm from Indonesia and Malaysia and soybean oil from the U.S., Brazil and Argentina.
Indian Stockpiles
Vegetable oil purchases in the eight months through June rose 12 percent to 7.15 million tons, association data show. Cooking oil demand may jump to 23 million tons by 2020 from 17.5 million tons and imports will grow significantly, says the Food Ministry. The rupee fell to 61.8050 per dollar on Aug. 6.
Palm for delivery in October climbed 2 percent to 2,250 ringgit ($692) a ton on the Malaysia Derivatives Exchange yesterday. Prices slumped 22 percent in the past year.
Output in Malaysia probably expanded more slowly than a year earlier in July, keeping inventories at the lowest in more than two years, a Bloomberg survey showed on Aug. 6. Production rose 10 percent to 1.56 million tons in July from a month earlier, while reserves held at 1.65 million tons, it showed.
Inventories in India, including those at ports and in the pipeline, were probably 2 million tons at the start of August from 2.06 million tons in July, said Sandeep Bajoria, chief executive officer of Mumbai-based broker Sunvin Group.
“With the festival season starting soon these stocks should come down,” he said. “Consumers have been mostly protected from the impact of the depreciating rupee as overseas prices are weak.”
Crude soybean oil imports probably jumped to 230,000 tons in July from 156,720 tons a year earlier, while sunflower oil purchases may have declined to 60,000 tons from 80,101 tons, the survey showed.